Acetylcholine is an important neuromodulator in the brain and is essential for normal cognition. Behavioral studies suggest that cortical acetylcholine released from basal forebrain cholinergic axons play an important role in mediating the cognitive task of attention. Moreover, cholinergic dysfunction has been implicated in the cognitive disruption observed in Alzheimer's disease and schizophrenia. Despite the importance of the cortical cholinergic system, the synaptic mechanisms mediating cholinergic modulation of cortical circuits remain poorly understood. Basal forebrain cholinergic neurons project throughout the cortex where they provide the main source of cortical acetylcholine. However, understanding of how endogenously released acetylcholine affects cortical neurons and synapses is limited because it has not been possible to selectively stimulate cholinergic axons using conventional methods. By transducing cholinergic neurons in the basal forebrain with optogenetic constructs, I have demonstrated that I can overcome these technical challenges and selectively activate cholinergic axons in the cortex. Acetylcholine receptors are expressed in a cell-type specific manner and exhibit a wide range of response kinetics. By using an optogenetic approach, I am able to identify the postsynaptic targets of cholinergic axons and characterize the kinetics of their postsynaptic responses to endogenous ACh for the first time. This information is critical to uncovering the mechanisms underlying cholinergic activity in the cortex and cannot be obtained by exogenous application of cholinergic agonists. The primary goal of this proposal is to test the hypothesis that cholinergic inputs differentially enhance cortical processing of feedforward sensory information while suppressing feedback information from other cortical areas in sensory cortex of mice. Layer 4 is the main input layer of the cortex, and layer 4 pyramidal neurons receive strong feedforward sensory inputs from the thalamus. However, feedforward inputs are also integrated together with feedback inputs onto layer 5 pyramidal neurons, which in turn form the primary output layer of the cortex. In the first aim, I will prepare thalamocortical slices to study how cholinergic inputs modulate feedforward thalamocortical synapses onto layer 4 pyramidal neurons. In the second and third aims, I will then use single and paired recordings to investigate how cholinergic inputs modulate inhibitory neurons and synapses that regulate feedforward and feedback inputs onto layer 5 pyramidal neurons. Together, these experiments will provide new insight into how acetylcholine modulates cortical circuits that play a role in sensory processing, and may provide new insights into neuropsychiatric conditions associated with cholinergic dysfunction.